Michael Powell, FCC Chairman

This is a partial transcript from Your World with Neil Cavuto, February 20, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: FCC boss Michael Powell was all set to unshackle the Baby Bells from rules they said stymied their growth. And he agreed.  But something happened on the way to that vote. Powell did not get his exact way. Or did he? Let's ask the chairman himself. With us now, the man who oversees the Federal Communications Commission, Michael Powell.

Mr. Chairman, thank you for coming.

MICHAEL POWELL, FCC CHAIRMAN: Thanks for having me, Neil.

CAVUTO: Did you lose something here?

POWELL: I think we won most of what we were seeking. I think the most significant story coming out of this item is that we were successful in achieving some very substantial broadband regulatory relief, which I think is going to set the stage for future investment in fiber optics and broadband infrastructure. That's the most important thing. Something I also cared about in terms of the unbundled network platform which many of your viewers may be aware of, we were not successful in convincing a majority of the commission, but I think we have done the right thing and done some very positive things for the economy.

CAVUTO: All right. Now in a nutshell, you're all for sort of deregulating a host of broadcast, telecom players, going well beyond what was done in the Telecom Act of 1996, and essentially unshackling pretty much all of these guys. But the other commissioners seem to be saying, or at least the three that voted this way, not so fast. Were they telling you, slow down?

POWELL: I don't know if there was a bigger message, you know, look, we're a five-member democratic institution, and majority rules. I think sometimes people forget about that. But it is important to note that these are very difficult issues. When I set out in my chairmanship, I said we are going to do the hard things, the difficult, controversial proceedings that the market desperately needs addressed. And you can expect that any of those issues are going to be controversial and difficult. We'll win most of what we're seeking, we'll lose some of what we're seeking. But I think on balance, we're going to achieve the right number of decisions and the right way that the country so demands.

CAVUTO: But Mr. Chairman, I know you say it's a democratic institution, all of that, but the one who did not support you - the swayed commissioner, the Republican commissioner, Kevin Martin. I don't want to get into soap opera intrigue there, but is there a problem?

POWELL: Look, again, I'm not going to get into that. I think that each commissioner is appointed by the president, confirmed by the Senate and has an independent mind and can vote as they wish. I don't agree with his judgment. I think it is wrong-headed. I think it will lead to difficulties and it may even be overturned in the courts. If that happens we'll have a second bite of the apple and hopefully the majority will see the wisdom of a different course.

CAVUTO: All right. Now, one of things we should just step back, you know this like an encyclopedia, I unfortunately do not, but I think one of the things that I've seen here is that the Baby Bells want to get into a lot more territory and they don't want to necessarily give away a lot of their space or lines at cut-rate prices competitors who can then underprice them and burn them. But this would essentially keep that in place, would it not?

POWELL: It is a very complex decision, there are many elements that are at issue about whether to be unbundled. I think the significant issue is not whether they will have to provide some elements of their network.  Because they will, the statute requires that. And nothing I was going to do was going to change that. What is significant is whether a competitor can basically get every single element necessary to offer full service from the incumbent at very heavily regulatorily subsidized prices. The reason that the battle today over the switching element was so important is it really is the capstone of that full service platform that lets a competitor enter and use the entire suite of elements from the incumbent without providing any of its own facilities. I think that's where the rub is.

CAVUTO: All right. Now let me ask you about another rub. One of the players that wanted those kind of new freedoms, SBC, has also been rumored to be interested in buying GM Hughes` DirecTV. At first blush, do you have a problem with that?

POWELL: Of course I have always said that mergers, we need to look at the specifics. So I don't want to opine on what the merits of that particular transaction are. But I think it represents an important reality. And I am glad to see the Baby Bells beginning to think about it and tackle it. Which is, in the digital migrated world, in which we're into new and advanced services, a significant communication provider has to provide a host of suite of services over that platform. And.

CAVUTO: So you wouldn't be against an SBC, at least at face value, making a bid for DirecTV? It would not be a regulatory issue for you?

POWELL: Well, we'd have to see the specifics. But I'm not against in principle the notion of Bells or anyone else trying to collect the assets necessary to provide the full bundle of services that consumer is increasingly demanding.

CAVUTO: So when EchoStar was making a bid there, there was - you saw it was a competitive disadvantage and that it would be bad and too many - one guy controlling the roost. Would you feel the same way if Rupert Murdoch and News Corp. were to make a bid?

POWELL: We don't know. Just like I wouldn't have guessed at the outset of the EchoStar transaction whether it was anti-competitive or pro-competitive until we had wrestled with the facts of the transaction. I couldn't possibly speculate on whether - if Fox bought it, it would have a similar problem or a different problem. One thing that would be different, is it would be more of a vertical relationship than a horizontal one.

CAVUTO: All right. Michael Powell, thank you very much.

POWELL: Thank you, Neil.

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